Welcome to Quint Cobb & Associates

Refinance and Purchase Loan Options

Below is a detailed breakdown of the 10 major refinance and purchase loan options available today.

1) Full Documentation Loans

2) Jumbo Loans

3) Stated Income Loans

4) Cash-Out Loans

5) Purchases

6) Low Credit Scores

7) High Loan to Value Ratios

8) FHA loans

9) Short Refinances

10) Loan Modification

Please take your time reviewing this information and please call or email us if you would like to go over anything in more detail.

1) Full Documentation Loans back to top

Right now rates are as good as we have ever seen!

The only challenge is to qualify for these rates.

The best way to qualify for the best rates and loans is to provide Full Documentation.
I think there has been a lot of confusion over what Full Documentation means.

Often times our clients say to us, “I can show you my income documentation, no problem”.

Full Documentation not only means showing income information and documentation it also means qualifying for the loan based on your True Documented Income (as opposed to Stated Income).

The bank takes a look at your documented income and compares it to the debts that show up on your credit report (mortgages, credit cards, vehicles, etc).
This is called the Debt to Income Ratio.

Right now for Conventional Full Documentation Loans the banks are looking for a Debt to Income (DTI) Ratio of 45% or less.

People that qualify for Full Doc loans are usually:

1)     W2 Borrowers that have to report all of their income

2)     W2 Borrowers that have limited tax write offs (bc they are not self employed)

3)     W2 Borrowers that have more income than debts that show up on their credit reports

4)     Self Employed Borrowers that report more income (even after write offs) than debts that show up on their credit report.

5)     The banks want to see 680 Credit Scores or better and some lenders are moving toward requiring 700 Credit Scores or better to qualify Full Documentation.

6)     Also many lenders are shying away from borrowers that have multiple properties that show up on their credit reports. (Please call me if you have questions about this).

Full Documentation is the best way to go if one qualifies.
Obviously Full Documentation is easier in areas where median home values and loans are lower than 417 thousand.

Going Full Documentation is more difficult in areas with large home values and large loan amounts.

For example to qualify Full Documentation for a loan of 250k an average household would need to make 6 – 10k per month (depending on exactly how much debt shows up on the credit report). With absolutely no debt other than the mortgage a household could make even less. But with credit cards and car loans and student loans a borrower would have to show even more).

To qualify for Full Documentation the bank divides your debt by your household income (to get your Debt to Income Ratio).

The Debt to Income Ratio (DTI) must be below 45% in most cases.

And to qualify Full Documentation for a loan of 500k an average house hold would need to make 12 – 20k per month (depending on exactly how much debt shows up on the credit report).

With absolutely no debt other than the mortgage a household could make even less. But with credit cards and car loans and student loans a borrower would have to show even more).

As you can imagine this is why so many people chose Stated Income in areas where home values and loan amounts were higher than 417k.

Most banks are moving in the direction of Full Documentation to protect their investments. This is a direct result of Housing Values. When housing values are increasing the banks can afford to have looser guidelines. As Housing Values are decreasing the banks in turn tighten their guidelines.

As you know, interest rates right now are extremely good. The best way to qualify for the best rates and programs is to qualify Full Documentation.
Please call or email me if you have any question or to go over this in more detail.

2) Jumbo Loans back to top

Jumbo Loans are considered loans above 417 thousand dollars. The County Jumbo Lending Limits were raised (so please call or email us to see what the Jumbo County Lending Limits are for your county).

In the wake of the recent market correction many banks are shying away from Jumbo Loans all together.

However Jumbo Loans do exist today.

Because by definition Jumbo Loans are larger, banks have to scrutinize Jumbo Loans more than conforming (lower loan amounts).
Right now most lenders are asking clients to provide FULL DOCUMENTATION to qualify for Jumbo Loans.

Obviously Full Documentation is easier in areas where median home values and loans are lower than 417 thousand.

Going Full Documentation is more difficult in areas with large home values and large loan amounts.

For example to qualify Full Documentation for a loan of 250k an average household would need to make 6 – 10k per month (depending on exactly how much debt shows up on the credit report). With absolutely no debt other than the mortgage a household could make even less. But with credit cards and car loans and student loans a borrower would have to show even more).

To qualify for Full Documentation the bank divides your debt by your household income (to get your Debt to Income Ratio).

The Debt to Income Ratio (DTI) must be below 45% in most cases.

And to qualify Full Documentation for a loan of 500k an average house hold would need to make 12 – 20k per month (depending on exactly how much debt shows up on the credit report).

With absolutely no debt other than the mortgage a household could make even less. But with credit cards and car loans and student loans a borrower would have to show even more).

As you can imagine this is why so many people chose Stated Income in areas where home values and loan amounts were higher than 417k.

To learn more about Full Documentation Loans click on the FULL DOC attachment in this email.

It is still possible to get a Stated Income Jumbo Loans (we just need to have large compensating factors such as low Loan to Value Ratios and Large Reserves).

And since several major banks are no longer offering Jumbo Loans under any circumstance, Stated Jumbo Loans are more difficult as well.

The banks want to see 680 Credit Scores or better and most lenders are moving toward requiring 720 Credit Scores or better to qualify for Jumbo Loans.

Jumbo Loan conclusion:

It is still possible to get a great Jumbo Loan and it is even possible in some cases to go Stated.

We were able to lock interest rates as low as 5.5% on million dollar loans going Full Doc over the last 12 months.

The problem was that not many people qualify Full Doc on such large loan amounts.
But the rates and loans are there if we can qualify.

Qualifying for a Jumbo Loan is simply more difficult than qualifying for a smaller, conforming Loan.

This is because there is more risk on the bank on large loan amounts.

This is ironic because the banks used to fight tooth and nail to get larger loan amounts.

Now many of those same banks are not even lending on large loan amounts due to their losses over the last 12 months.

Please call or email me if you have any questions about qualifying for a Jumbo Loan.
There are many options available and even if we do not qualify based on the tighter loan guidelines there is an option of Modifying your current loan WITHOUT refinancing with a Loan Modification.

Also there is the option of the FHA Short Refinance which would allow for a major reduction in principle on homes that are upside down.

To learn more about these options, please read the information on LOAN MODIFICATION and FHA SHORT REFINANCES (sections 9 and 10 below).

3) Stated Income Loans back to top

Stated Income loans are loans where clients have the option to “state” rather than provide Full Documentation proving their income.

Many have referred to these loans as “Liar Loans” recently.

In reality, Stated Income loans were simply loans where the client was able to state their income rather than provide documentation and proof.

This was possible for clients that have compensating factors such as high credit scores (usually above 700 or 720) good equity (usually more than 20 or 30%) and good liquid reserves (usually more than 6 months worth of mortgage payments).

For individuals that qualified for these compensating factors the bank would not ask for income verification.

The original guidelines for stated income were created so that borrowers stated their true income but did not have to document or verify the income.

As you can imagine this was fertile ground for misuse and abuse.

Because there was such an appetite and competition for loans, many lenders over looked outrageous stated income especially for self employed and retired individuals.
Stated income was originally designed to help Self Employed individuals that did not have traditional W2 income and also had massive tax write offs which effected their adjusted income on their tax returns.
The abuse of the stated income came when fixed income retired borrowers and W2 income borrowers were allowed to state their income.

Between 2001 and 2006 lenders were willing to take more risk as property values were rising or holding steady, which means lenders were more willing to provide creative and more risky products at that time.

In addition there was increasing competition for loans as more and more banks, conduits and lenders entered the lending industry.

There were so many sources for financing that it seemed there was always a home to be found for almost any scenario, no matter how difficult the borrower’s income situation was to document.

Once it became clear that property values would not always increase, the lenders had to curb their insatiable appetite for Stated Income loans. And once massive foreclosures became a concern, the remaining lenders that survive have had to restructure their Stated Income loan guidelines

To be clear: Stated Income Loans still exist but they are back to reality.
For borrowers that have compensating factors many lenders will still offer stated income (and will not require verification of income or documentation).

However we have seen that 9 times out of 10 the underwriter will require verification and documentation before the loan funds, so essentially Stated Income is just a time savor at the beginning of a loan process for individuals that truly have the income they are stating.

It is also true that many lenders are no longer offering Stated Income Loans at all.

4) Cash-Out Loans back to top

Cash Out refers to a refinance scenario where a borrower is borrowing more money than they currently owe on their loan or loans.
The amount above their current loan amounts is considered Cash Out.

Cash-Out Loans are a great way to use the equity in your home to:

1)     Do home improvements,

2)     To Consolidate Debt

3)     To Buy More Property

4)     Or To Invest

Even though there is a lot of volatility in the housing market and lending world, many homeowners still have a large amount of Equity in their homes that they can use to their advantage.

Although there is a lot of uncertainty in the market right now, for those who qualify there has probably never been a better opportunity to buy Real Estate, to do Home Improvements or to invest than right now.

Now more than ever, Cash is King.

For those that have access to cash the opportunities are incredible.

Home Improvements

(During the peak of the market the housing and building industries hired and trained record numbers of contractors and skilled constructions workers.

Now that the housing market has cooled off, there are many skilled construction workers and contractors that will do incredible work at rock bottom prices.

Consolidate Debt

As we all know, rates are extremely low but many credit card rates are still through the roof.

For those that qualify, this could be a great opportunity to consolidate high interest rate debts into a low rate, low payment, and tax deductible mortgage payment.

Buy More Property

All you have to do to hear about low property prices is to turn on the news.
On the one hand for home owners this depressing news.
But for buyers or investors, the next 12 months could prove to be the best opportunity to invest in real estate in the next 20 years.
With rates as low as they are and with sellers as motivated as they are, for those that have the access to cash, this may be one of the best times in history to invest in Real Estate.

Invest

Having access to cash also allows all levels of investing from starting or investing in a small business to diversifying into real estate, liquid high yield savings, IRA’s, 401k’s and Investment Grade Insurance.

5) Purchases back to top

Probably the most popular types of loans right now are Purchases.

Many of my friends, family and clients are calling me to take advantage of the low home prices.

Banks are very motivated to lend on Purchases.

Below is a summary of the types of loans and down payments available for Purchases today:

FHA – Federal Housing Administration Loans allow as little as 3% down!

Here are the qualifications for FHA purchases.

Owner Occupied – FHA only lends on properties that the borrower intends to live in.

Full Documentation – To qualify for FHA borrowers have to qualify Full Documentation (to learn more about Full Doc read section 1 on Full Documentation).

3% Down – FHA allows the lowest possible down payment of 3% (no one else even comes close)

Great Rates – FHA loans have great low 30 year fixed rates

Owner Occupied Purchase (Conventional non FHA) 5 – 10% Down

If you are not using an FHA loan and you are planning to move into the property you can get loan with 5 – 10% down.

Right now 100% financing does not appear to be an option.

Our banking line is still offering 5% down for well qualified borrowers.

Second Home Purchases 10% Down

Second home pricing is very similar to Owner Occupied.

The only difference is that the property has to be in an area that would be believable as a second home (vacation spot, etc). It can not be down the street from you and be considered a second / vacation home J

Also for Second Home Purchases the borrower has to qualify based on their Debt to Income Ratio and they can not add any rental income to help (because obviously a second home is not a rental or investment property by definition). This can make it harder to qualify the purchase as a second home.

Investment Property / Non Owner Occupied Purchase 10 – 20% down

Most lenders are requiring 15 - 20% down on Investment Properties but I have a program with great rates that will still allow 10% down!

6) Low Credit Scores back to top

Lower Credit Scores are considered anything less than 680.

Right now to get a conventional loan we really want to have a 680 Credit Score or Higher.
For borrowers with less than 680 Credit Scores the options have narrowed in the last 12 months.

There used to be a home for every loan scenario.

Now banks have tightened and are requiring tighter and tighter loan qualifications.

For clients with less than 680 Credit Scores there are two options.

1.     FHA loans (which allow borrowers to refinance or purchase properties up to 97% of the value of the home)

2.     FHA Short Refinances (principle reduction down to 90 – 97% of the current appraised value)

3.     Loan Modification (modification of the loan terms with out refinancing)

If you have a Credit Score that is lower than 680 please read the information on FHA loans (section 8) FHA Short Refinances (Section 9) and Loan Modifications (section 10)

7) High Loan to Value Ratios back to top

Right now many people are finding it difficult to refinance because the amount they owe is close to or higher than the amount the property is worth (in today’s market).

This is called a High Loan to Value Ratio (LTV).
To determine your Loan to Value Ratio simply divide the amount you owe by the value that you think the house would sell for today (based on recent home sales in your area).

High Loan to Value Ratios are considered anything above 80%.

For well qualified borrowers getting a loan to 90% is not difficult.

But for anything above 90% there are two options.

1.     FHA loans (which allow borrowers to refinance or purchase properties up to 97% of the value of the home)

2.     FHA Short Refinances (principle reduction down to 90 – 97% of the current appraised value)

3.     Loan Modification (modification of the loan terms with out refinancing)

8) FHA loans back to top

What is an FHA Mortgage Loan?

An FHA loan is a mortgage loan that is insured by the U.S. government. Since the government insures the mortgage loan, lenders will be more willing to give out loans under more difficult situations. With an FHA loan, the government doesn’t’ actually give you the mortgage loan, a lender does (lenders can be institutions like banks or mortgage brokers). Any money used to pay for the home will come from the lender, not the US government. The government simply insures the loan so that lenders will give out more loans, since they know that if a borrower can’t pay the loan, the government will step in and over it.

The “FHA” stands for the Federal Housing Administration, a government agency which is itself a part of the Department of Housing and Urban Development (HUD). FHA was created in 1934 as a direct result of the Great Depression. During the Great Depression, millions of Americans were unable to make payment on their debts, the banking system failed, and millions of homes were foreclosed.

To combat the growing problem of indebtedness and a lack of homeownership during this period, the United States government set up the FHA, which was designed to provide families with loans so that they could purchase a home. The Great Depression ended in the late 1930s, and since then FHA loans have been used basically for the same purpose: to provide low and moderate income families with affordable housing. FHA loans are also great for first time home buyers, for qualified buyers that want to put less than 10% down and for borrowers with less than perfect credit.

Who should consider an FHA loan?

Lower Credit Score Requirements (in some cases as low as 530 Credit Score).

Lower Down Payment Requirements for Purchases (as low as 3% down)

Higher Loan to Value Ratios for Refinances (FHA loans can go up to 97% of the value of the home).

Homeowners that owe more on the house than it is worth and would like their principle balance reduced with an FHA Short Refinance.

And finally homeowners that would like the interest rate reduced on their current FHA loan through an FHA Streamline Refinance.

In order to qualify for an FHA loan that home has to be owner occupied.

(*FHA doesn’t allow 2^nd homes *FHA only allows investment properties for refinancing, not purchase and only if the property is currently in an FHA loan and then it will be a streamline).

Please call us to go over FHA Streamline Loans. For clients that currently have FHA loans this is an incredible option to lower your interest rate with no appraisal and no out of pocket costs. It is literally a streamlined loan to lower your rate and payment!

Also the borrower has to qualify Full Documentation.

County limits for FHA loan limits were recently raised. Please research the FHA limits in your county or call me and I will let you know.

FHA loans were initially meant for people affected by the Great Depression. These days, most individuals who get FHA loans are interested in the lower down payment, the lower Credit Score Requirements, Flexible first time home buyer programs, to Reduce the Principle Loan through an FHA Short Refinance or to streamline and reduce the interest rate on their existing FHA loans.

If you meet these criteria, then an FHA loan may be right for you.

If you are interested in an FHA loan here is what your income, credit, loan amount and cash reserves should be:

Income – Your income can be relative low, but more importantly it should be steady for the past 2 years. If not the FHA might still insure your loan. But proving a steady source of income is always beneficial. Another nice thing about FHA loans is that you can add as many Non Occupant Co Borrowers as you need to qualify for the income requirements. The income has to be Full Documentation (see that attachment on Full Doc for more info).

Credit – Most people who get an FHA loan have credit that doesn’t meet prime pricing requirements. FHA will take scores as low as 580 and even 530 in certain cases. FHA loans are based on Case by Case basis. But FHA loans are just as good a choice for people with 800 FICO scores and that are attracted by the high LTV limits and or the Principle Reduction opportunity through the FHA Short Refinance.

Loan Amounts – FHA loan amounts are based on your county limits. The limits were raised recently so check with your county or call us and we will let you know.

Cash Reserves – It would be best if the borrower had cash reserves that exceeded the 3% down payment that FHA requires. To figure out what your down payment will be, just take the price of the house you wan tot buy and multiply it by 3%.

If you think that an FHA loan may be right for you and could help you refinance or purchase a property, please call or email us to go over all of your options in detail.

9) What is a Short Refinance back to top

(Principle Reduction)

Another powerful option for homeowners that have not been late on their mortgage but are interested in a loan modification or principle reduction is the new Short-Pay Refinance.

Many homeowners still have good income, and have not been late on their mortgage or credit cards but cannot refinance because the value of their home has dropped in recent months.

For these individuals there is a powerful option that went into effect in October called the Short-Pay Refinance.



Where as a "Short Sale" has become a well known solution for borrowers to avoid foreclosure by selling their home for less than what is owed, the "Short Payoff Refinance" (Short-Pay Refi) is becoming a popular tool for borrowers to retain their home.

This process is similar to a short sale but, instead of the property being sold, it is refinanced with a new lender. A Short-Pay Refi is unique in that it allows the borrowers to keep their home, lower their payments and eliminate the upside down equity in their homes while reducing their principal.

The transaction itself is a basically a three part process.

1.     First we need to establish the actual current conservative value of the home with an appraiser.

2.     Next, we document and underwrite the homeowner's income for the new appraised value and issue an approval.

3.     Now, armed with that approval, we can enter into equity re-negotiations with the bank/loan servicer of the homeowner's loan to negotiate a principle reduction on the current mortgage.

Once the bank/loan servicer accepts the offer presented, we can complete the new loan transaction and principle reduction.

In areas where values have dropped 20% or more, this could mean a substantial reduction in principle and loss to the lender.

It is still a win win for the homeowner and the lender (who gets to remove the bad loan from their books and move forward making new loans.

Who should get a Short-Pay Refi?

For those borrowers that still have decent credit, ficos, income and no mortgage lates but through either upcoming changes to their interest rate (making it no longer affordable) or to a decline in the value of their home (owing more than it's worth), a Short-Pay Refi is the perfect solution.

Through the Short Refi, the borrower will qualify to refinance into a low fixed rate loan at the highest LTV's (loan to value ratio) possible.

This allows the borrowers to put the brakes on before everything gets away from them and spins out of control.

Why would the bank/loan servicer agree to a Short-Pay Refi and not just foreclose on the property?

Simply put, foreclosing on a property requires large amounts of legal fees and then the home is typically sold at a substantial discount off of the fair market value. The Short-Pay Refi allows the loan servicer to avoid the majority of the legal fees and let's the new lender make its largest loan based on the fair market value. When a Loan Modification can't solve the problem as many loan servicers are not lenders, a Short-Pay Refi becomes a very powerful alternative.

To sum it up.

In essence, with a Short Payoff Refinance, the bank/loan servicers are happy because the loan is off their books and the homeowners are happy because they get a fresh start while still staying in their home with a lower mortgage payment and a lower mortgage balance.

It needs to be noted that Short Refinances, Short Sales as well as Loan Modifications, all require that we negotiate with the lender.

The lender will not grant a Loan Modification, a short refinance or a Short Sale unless we negotiate and present a convincing case to the lender that this alternative will cost the lender less than a foreclosure. As with any negotiations the final outcome and optimal results are determined by the knowledge, experience and tools at the disposal of the negotiator.

Once your file has been submitted for review we will receive an eligibility approval within 24 – 48 hours.

Once your file has been approved by our network of attorneys we can rest assured that your situation qualifies you for modification.

10) Loan Modification back to top

This information could be very beneficial to anyone that is finding it increasingly difficult to refinance due to dropping home values and also tightening lender guidelines.

I think this could finally help you or someone you know WITHOUT refinancing.

Obama signs The Affordability and Stability Plan

The Affordability and Stability Plan has 2 Parts:

Part 1 is the Refinance Option

Part 2 is the Loan Modification Option

1) The Refinance Part of the plan:

To be eligible for the refinance option of this plan, the borrower must:

Be on time with their mortgage payments

The LTV (loan to value ratio) of the property can can not exceed 105%

At the moment only loans “held or securitized by Fannie Mae and Freddie Mac” qualify for the refinance option.

If these qualifications are not met, the homeowner can only qualify for the loan modification option.

2) The Loan Modification Option:

To participate in the loan modification plan, borrowers must:

·     Have obtained their mortgage before Jan. 1, 2009;

·     Have a primary mortgage of less than $729,500;

·     Must live in the property;

·     Must be able to fully document their income by providing tax returns and pay stubs;

·     Must sign a statement of financial hardship; and

·     Go for counseling if their total household debt - including auto loans, credit cards and alimony - totals more than 55% of their income.

The modification program will be in effect until the end of 2012, but loans can only be adjusted once.

Officials also unveiled more details on how servicers will modify the loans. First, they must reduce interest rates so that borrowers' total house payments are not more than 38% of their monthly income. The government will then subsidize servicers dollar-for-dollar to lower that ratio to 31% - but the interest rate can't go below 2%.

The new interest rate would then remain in place for five years, after which it will increase by 1 percentage point a year until it reaches either the original rate or the prevailing mortgage rate at the time of the modification, whichever is lower.

If rate reductions aren't enough to get payments to 31% of income, a lender can extend the term up to 40 years, or shift part of the principal to the end of the loan at no interest. Servicers also have the option of reducing the loan's balance.

The multipronged fix calls for companies to help as many 4 million struggling borrowers by modifying loans so monthly housing payments are no more than 31% of monthly gross income.

Separately, homeowners who haven't missed a payment can refinance into lower-cost loans even if they have little or no equity. This is expected to help up to 5 million homeowners.

The $75 billion loan modification plan will provide incentives to borrowers and loan servicers and investors to spur mortgage modifications. The government will also subsidize interest rate reductions to get borrowers to affordable monthly payments.

"This plan will help make home ownership more affordable for nine million American families and in doing so, help to stop the damaging impact that declining home prices have on all Americans," said Housing Secretary Shaun Donovan.

Borrowers can now begin to see if they are eligible for assistance. Federal officials will promote the program at homeownership events nationwide.

The administration Wednesday released additional eligibility criteria and program guidelines.

The loan modification plan focuses on people who are behind in their payments or are at risk of default.

Federal officials clarified the definition of "at risk" as those: suffering serious hardships, declines in income or increase in expenses; facing an interest rate hike; having high mortgage debt compared to income; owing more than their house is worth, or demonstrating other reasons for being close to default.

The “Homeowner Affordability and Stability Plan” will exclude a number of American Homeowners.

No non-owner occupied properties

No jumbo loans

If you don’t have a job, you don’t qualify

Homeowners whose loan to value is at 150% or higher

Homeowners who qualified with stated income on their original loan application

Homeowners whose loan to value is greater than 105% but their mortgage payments are below the 31% income threshold.

Here is the Problem:

Banks are not going to reach out to and let them know if they qualify!

It is up to us to find out if we qualify.

The most commonly asked questions we have been asked are below: ·

Is my loan securitized by Fannie Mae or Freddie Mac?

Did the loan company qualify me with Stated Income? (95% of all loans over the last 5 years were stated income loans, even if you supplied all of your income, it’s likely the lender qualified you via stated income to make the process easier. Thus ruining your chance of qualifying for the new refinance plan).

If my property is above 105%, what are my options?

If you would like the answers to these questions, please click on the link to our Free Loan Evaluation Form below and fax it back for us to review. We will let you know if you qualify within 24 – 48 hours of receiving your completed form.

Printable Qualification Form

Clearing up the Misconceptions about the Presidents Homeowner Affordability Plan

We have received hundreds of emails and calls from homeowners that are worried that they don’t fit the guidelines for the Presidents new Homeowner Affordability Plan wanting to know if that means that they don’t qualify for any type of loan restructuring, refinance or modification.

It is important to take a quick moment to clarify that there are 4 powerful options for every single homeowner in the United States to help them get their loans under control.

The Presidents new Homeowner Affordability Plan is just the newest option available to homeowners but it is far from the only option.

To be clear, every single homeowner in the United States will have the opportunity to restructure, refinance or modify their existing loans as long as they present a lender or servicing company with a strong enough case that after a forensic cost benefit analysis it is determined that it makes more financial sense to modify the mortgage than to let it run its current course.

As of today there are 4 extremely powerful options available to people that do not qualify for a traditional refinance.

In this email I have included the most recent information on the four options.

Please take your time reviewing this information and please call or email me to go over everything in detail.

4 Options Available to Homeowners

Below you will find detailed information on the following options:

1.      The Presidents Homeowner Affordability Plan

2.      Loan Modification

3.      Forensic Loan Review

4.     New Short-Pay Refinance

5.      Who Qualifies

      1) What really is the Homeowner Affordability Plan and who will it help?

1)     It appears that this will only help people with Primary Residences (meaning the home they live in).

2)     Homeowners that have multiple properties may have to liquidate them in order to qualify.

3)     The Plan will only help people with Conforming Loans secured by Fannie Mae or Freddie Mac.

4)     It also appears that it will only help people that owe no more than 105% of the current value of their home. Anyone that owes more than 105% of the current appraised value of their home will be out of luck.

5)     Also homeowners with second mortgages or Home Equity Line may be excluded. This is very problematic in states like Arizona, Nevada, Florida and California where home values sky rocketed and many homeowners needed two loans to buy a home or were given easy access to second mortgages when values increased. These people may not qualify.

6)     Finally with the Presidents new Homeowner Affordability Plan you may only get one shot at getting your loan restructured or modified. The President is enacting major oversight and checks and balances to make sure that the bailout money is being spent wisely. As a result of this each modification and applicants financials will be reviewed rigorously. Homeowners may need professional negotiation assistance even more now than before as they might only get one shot at after the Plan goes into effect, rather than the way it is now where we are able to change things if necessary as we go, even if the homeowner already submitted information to the lender prior to working with a professional negotiator. Each homeowner application is now going to be audited even more tightly and documented to the government to paper trail where the bailout is going to be going and helping for homeowners. There truly may only be one shot at a successful loan mod after the plan goes into effect.

7)     If you are denied the first time (because you don’t know how to structure your financials) you may never get another chance.

Conclusion:

The Homeowner Affordability Plan is a fantastic step in the right direction. It is a way to help force the banks to start helping homeowners and start using the money the government has given them. But as the first step it is really only designed to help people with relatively low loan amounts on loan amounts that do not exceed 105% of the current value of their homes, it is only for primary residences and for people that do not have other properties or second loans on their home. This plan is a great step in the right direction. At this point trying to work with your lender without professional negotiation assistance is very difficult. Trying to navigate the maze of rules and regulations is meant to be intimidating by the banks. The President’s Plan will help force the banks to start working with homeowners that fit these relatively conservative guidelines but it is a start. For everyone else (those with larger loan amounts, second homes, investment properties, self employed, those that have second or third mortgages and home equity lines, and for those that owe much more than 105% of the value of their home) luckily there are other very powerful options aside from the President’s new plan.

2) Loan Modification

Who qualifies:
Any homeowner can qualify for loss mitigation and loan modification as long as they present a lender or servicing company with a strong enough case that after a forensic cost benefit analysis it is determined that it makes more financial sense to modify the mortgage than to let it run its current course.

Misconception:

Loss mitigation and mortgage relief is reserved for people that cannot afford their home or their mortgage payment. This is untrue. Anyone can qualify for loss mitigation and mortgage relief. The factors that create a solid case for loan modification vary from lender to lender and are changing daily. So whether you have a fixed rate or an adjustable, whether you have a large amount of equity or you are upside down, whether you just received a raise or you lost your job, whether you have never missed a payment or you are considering foreclosure, whether you have large reserves or you are living off of credit, whether you are trying to modify your primary residence or your investment property, whether you own 1 home or 18, if it is determined that your specific situation and lender guidelines qualify you for loan modification then modifying your loan is not only possible it is guaranteed.

3) What is a Forensic Loan Review?

A Forensic Loan Review is an important tool when forcing lenders to negotiate with us for a loan modification, an Short-Pay Refinance or a Short Sale (especially if we have not been late on our mortgage).

Many lenders are trying to avoid negotiating with homeowners that are either current on their mortgages or that are only slightly delinquent. Lenders are first working with people that are just about to foreclose (and will cause the greatest and most immediate cost to the lender).

It is becoming apparent that a Forensic Loan Review is a necessary tool in getting the lender to negotiate with us for a Loan Modification, an Short Refinance or a Short Sale (all of which require calculated negotiations with the lender) whether a client is late on their mortgage or not.

Even a minor $30 miscalculation on the lender's part could be an actionable offense, and the threat of a lawsuit is often enough to persuade the lender to deal with you in trying to find a way to help you work through your financial difficulties.

In a forensic loan review, a legal pathologist scours your loan documents looking for errors in, among other things, the truth in-lending (TIL) statement the lender provided shortly after you applied for your mortgage and the lender's annual-percentage-rate (APR) calculation so you could compare loan costs.

If the TIL statement doesn't match up with the HUD-1 closing-cost sheet you received at closing, if the APR is off by just a hair, you might have cause for legal action against the lender.

Typically, forensic loan audits are ordered by mortgage investors to determine what kind of legal liability confronts them in the pools of loans they already own or are considering buying. As a so-called "business-to-business service," they are not generally available to individual borrowers.

That is until recently.

We are now offering comprehensive loan document reviews to homeowners as part of its service to help homeowners get the attention of their lenders and ultimately achieve powerful loan modification results.

If an error is found, it can force the lender to move you up to the front of the long, long line of borrowers who are looking for loan modification.

In some cases, if people were simply overcharged by $30 on the final HUD-1, or if the APR was higher by just .125 percent than was originally disclosed, this may give the lawyers leverage when negotiating with the lender to grant a beneficial loan modification.

This is an excellent option for homeowners that have Negative Amortization or Pick a Pay loans.

The TIL (truth in lending) statement for Neg Am loans are notorious for having mistakes.

Because Neg Am loans have 2 interest rates (the minimum payment rate and the fully amortized rate) the APR is very difficult to calculate and there is bound to be mistakes on the paperwork.
Intentional or not these mistakes give negotiators the leverage to force lenders to modify the loan.

4) What is a Short-Pay Refinance? (Principle Reduction)

Another powerful option for homeowners that have not been late on their mortgage but are interested in a loan modification or principle reduction is the new Short-Pay Refinance.

Many homeowners still have good income, and have not been late on their mortgage or credit cards but cannot refinance because the value of their home has dropped in recent months.

For these individuals there is a powerful option that went into effect in October called the Short-Pay Refinance.



Where as a "Short Sale" has become a well known solution for borrowers to avoid foreclosure by selling their home for less than what is owed, the "Short Payoff Refinance" (Short-Pay Refi) is becoming a popular tool for borrowers to retain their home.

This process is similar to a short sale but, instead of the property being sold, it is refinanced with a new lender. A Short-Pay Refi is unique in that it allows the borrowers to keep their home, lower their payments and eliminate the upside down equity in their homes while reducing their principal.

The transaction itself is a basically a three part process.

1.     First we need to establish the actual current conservative value of the home with an appraiser.

2.     Next, we document and underwrite the homeowner's income for the new appraised value and issue an approval.

3.     Now, armed with that approval, we can enter into equity re-negotiations with the bank/loan servicer of the homeowner's loan to negotiate a principle reduction on the current mortgage.

Once the bank/loan servicer accepts the offer presented, we can complete the new loan transaction and principle reduction.

In areas where values have dropped 20% or more, this could mean a substantial reduction in principle and loss to the lender.

It is still a win win for the homeowner and the lender (who gets to remove the bad loan from their books and move forward making new loans.

Who should get a Short-Pay Refi?

For those borrowers that still have decent credit, ficos, income and no mortgage lates but through either upcoming changes to their interest rate (making it no longer affordable) or to a decline in the value of their home (owing more than it's worth), a Short-Pay Refi is the perfect solution.

Through the Short Refi, the borrower will qualify to refinance into a low fixed rate loan at the highest LTV's (loan to value ratio) possible.

This allows the borrowers to put the brakes on before everything gets away from them and spins out of control.

Why would the bank/loan servicer agree to a Short-Pay Refi and not just foreclose on the property?

Simply put, foreclosing on a property requires large amounts of legal fees and then the home is typically sold at a substantial discount off of the fair market value. The Short-Pay Refi allows the loan servicer to avoid the majority of the legal fees and let's the new lender make its largest loan based on the fair market value. When a Loan Modification can't solve the problem as many loan servicers are not lenders, a Short-Pay Refi becomes a very powerful alternative.

To sum it up.

In essence, with a Short Payoff Refinance, the bank/loan servicers are happy because the loan is off their books and the homeowners are happy because they get a fresh start while still staying in their home with a lower mortgage payment and a lower mortgage balance.

It needs to be noted that Short Refinances, Short Sales as well as Loan Modifications, all require that we negotiate with the lender.

The lender will not grant a Loan Modification, a short refinance or a Short Sale unless we negotiate and present a convincing case to the lender that this alternative will cost the lender less than a foreclosure. As with any negotiations the final outcome and optimal results are determined by the knowledge, experience and tools at the disposal of the negotiator.

Once your file has been submitted to AMRS we will receive an eligibility approval within 24 – 48 hours.

Once your file has been approved by AMRS, we can rest assured that your situation qualifies you for modification.

And once we know we have the ability to have the loan modified we can go over your 4 loan modification options in detail.

Importance of Professional Negotiation Assistance

This is one of the most incredible times in banking and lending history. Loan Modification has always existed, yet over the last 30 years it was usually not in the banks best interest to modify a loan rather than foreclose. Only recently with the advent of 100% financing and relaxed lending guidelines have banks been put in a position that many homeowners owe more than their homes are worth.

For the first time ever on a nationwide scale, foreclosures will cost lenders more money than simply modifying the loans and taking a loss on the amount of interest or principle balance.

If we had been told 2 years ago that we could get an easy low doc loan and either buy a home with zero down or refinance and cash out to 100% of the over inflated value of our homes and in 2 years qualify for a loan modification or an short refinance and have our interest rate reduced to below the going rate and even have the principle balance of our loans reduced we would not have believed it.

But that is exactly what is happening for homeowners that qualify.

I do not think that by asking for a loan modification or an Short Refinance we are taking advantage of the lenders. Remember these are the same lenders that would raise the interest rates on our credit cards to 22% if we miss a payment or freeze our Home Equity Lines of Credit and Small Business Lines of Credit without warning.

It is my firm belief that everyone that has a mortgage in the United States should see if they qualify for a loan modification or short refinance.

Loan modifications, Short Refinances and Short Sales all require that we negotiate with the lender.

The lender will not grant a Short Refinance a Short Sale or a Loan Modification unless you negotiate and present your case without a shadow of a doubt. As with any negotiations the final outcome and results are determined by knowledge and experience of the negotiator. One important factor stands alone in determining the best results and that is Professional Negotiation Assistance.

Even for people that believe they may qualify for the Presidents new Homeowner Affordability Plan, having professional assistance may be more important than ever.

With the Presidents new Homeowner Affordability Plan homeowners may only get one shot at getting a loan modification. Once you submit your financials you may not get another chance, making it more important than ever to have a professional on your side (just as you would with a divorce, bankruptcy, arrest or injury).

There is a complex set of procedures, negotiations, and documentation that needs to be completed. In most states this process needs to be performed by an attorney or properly licensed counselor.

The key to borrower success is navigating the red tape and unfamiliar internal processes at banks and lenders and knowing when to be aggressive and when to take the offer and this is why working with professional loan modification experts is extremely important.

Even more frustrating and challenging is the fact that the lender that services our loans may not be the ultimate investor that owns the note. The loan modification guidelines for the company that services your loan may be dramatically different from the company that owns the note. In addition to this the loan modification guidelines are changing monthly and vary from bank to bank. Countrywide has changed their guidelines on late mortgage payments 3 times in as many months. Countrywide even told one of my clients that what may work with Countrywide last month won't always work this month. This is exactly why homeowners need professional assistance to obtain the best results possible.

The window for homeowners to qualify is very small and it is getting smaller due to stricter guidelines and audits as a result of the President’s Plan. Many lenders require homeowners to have monthly positive income to qualify while others require negative cash flow and it is different depending on the lender.

So if a homeowner doesn’t know this information (because lenders do not put out guidelines for public use) it can be difficult for homeowners to know how to approach the lender with the proper numbers.

Homeowners could disqualify themselves immediately by saying the wrong thing and they may only get one shot.

This is just like having an attorney do divorce or bankruptcy paperwork.

For many homeowners, this is their most important and probably largest investment into one thing.

It makes sense that they want someone that is skilled and understands how to handle the negotiations and do it for them so they don’t cause any mistakes and in order to insure the best results for them.

5) Who Qualifies?

The next step for any homeowner interested to see if they qualify for one of these programs is to simply fill out the Free Loan Evaluation Form (by clicking on the link below) and faxing it back to us for our network of attorneys to review.

To Qualify:

If you would like to get a certified pre-qualification for a Purchase, Refinance, an FHA loan, Loan Modification or a Short Refinance (principle reduction) simply fill out the Free Loan Evaluation Form Below and fax it back to us for analysis. You will receive an approval and a certified pre-qualification within 24 hours of completing this form.

Quint Cobb & Associates (Refinance Pre-Qualification Form)

Quint Cobb & Associates (Purchase Pre-Qualification Form)

Quint Cobb & Associates (FHA Pre-Qualification Form)

Quint Cobb & Associates (Loan Modification Evaluation Form)

If you would like more information on Conforming or Jumbo Loans, Conventional or FHA Purchases, FHA Refinances, FHA Streamline Refinances or Short Refinances (principle reduction) or Loan Modification please call or email us today.